Great blog posts about macroeconomics

Can One Item Impact GDP?

Whether looking at the expenditure method or income method of GDP, we can see that GDP consists of all the domestic good produced and consumed by a country in a given period of time. Typically, per year we see an increase in the economy, as measured by GDP of about 2.5%.

Upon thinking about GDP, and all the various components it encompasses, I began to wonder if it was possible for one specific item or product to profoundly impact GDP in a specific month or quarter. Being that I was sitting on my MacBook, I thought that it was likely an apple product could. So, I began to look into the most commonly purchased apply product, the iPhone.

Turns out that in the fourth quarter of 2014, with the release of the iPhone6, apple sold 39.2 million phones, surpassing all other competitors and marking its highest earned revenue in a quarter yet (see figure). Could such large sales of just one company, lead by the release of a new product, impact the national GDP? Turns out, it can! Experts estimate that the release could have potential impacts on fourth quarter national GDP of about .25% to .5%. This is an outstanding figure when you recognize average annual growth is 2.5% total. Interesting that we live in a society today that invests so much of their national consumption in a cell phone but has trouble providing adolescent students with proper textbooks.

6 thoughts on “Can One Item Impact GDP?”

There is no doubt that Apple and its products play a large and influential role in our society. But here’s something to ponder: Google’s Android mobile operating system had a 76.2% share of all users globally while Apple’s iOS had just 19.7% in 2014 according to the IDC.

At a market capitalization of over $700 billion, Apple is the world’s most valuable company. In fact, the value of Apple’s stock exceeds the value of every stock on either the Mexican or the Russian stock exchange put together.

It’s amazing to think that a single new product, which is really more like an old product with a few tweaks, can generate such a huge frenzy that it has a noticeable impact on GDP. I always complain about new Apple products becoming obsolete when the next version is launched 6 months later (but although I complain about it I still bought an iPhone anyway). Apple’s planned obsolescence and frequent new product launches may benefit the country’s bottom line output, but how much better off all of that consumption makes us is questionable. As you pointed out, there are much better ways that money could be spent, including investing it in children’s education.

This actually really surprised me. I understand how big I-phones are but to change the entire landscape of the United States GDP? I would never have guessed that it would have made a dent. Very interesting observation!

This is cool stuff. Thinking about it empirically, I’m not surprised that Apple has such a large influence on our economy. Looking around campus, it’s really incredible to see how many students here have Macs in the library, and even more incredible to see how many people not only own smartphones, but specifically iPhones.